All-India cement demand is expected to grow by 4.5% in FY12E against 4.4% in FY11 and 10.2% in FY10, according to analysts at ICICIdirect.
Cement demand has been subdued during the year and grew by 3.9% YoY in April-September 2011 as the consumption from the housing and infrastructure segments remained sluggish on account of key issues like rising cost of capital, land acquisition and clearances and unavailability of key raw materials like coal to the manufacturing industry. For the remaining year (October-March 2011), ICICIdirect expect demand to grow by 5.1% YoY as demand is expected to pick up post monsoon. However, the slowdown in construction activities would remain a key concern.
The capacity utilisation rate is expected to decline further to 75% in FY12E from 77% in FY11 and 87% in FY10. This is on account of 18Mt additions in effective capacity as against incremental demand of 10Mt during the period, it added.
CICIdirect expect the utilisation rate to remain at 75% in FY13E (incremental demand of 20 MT as against incremental capacity of 23Mt. However, it is expected to start improving from FY14E onwards as incremental demand is likely to keep pace with additions in effective capacities. It expect utilization at 77% in FY14E (incremental demand of 23Mt as against incremental capacity of 21Mt, it further added.